Enterprise Resource Planning

Analogous to the nervous system, an ERP (Enterprise Resource Planning) system connects the limbs of a company.  See the image below for clarification.

Does the ERP structure follow company structures or are companies structuring themselves around the model?  Well, the answer is it really depends.  

The ERP structure came in '90 following the MRP (Materials Requiring Planning) structure that was quite successful in organizing companies in the manufacturing industry.  ERP went beyond the MRP structure in that it aimed to integrate all core aspects of a business.  ERP extended the traditional model to include different industry sectors and company sizes.


Because the ERP structure is relatively new across industries, some older, established companies have ignored the need for an integrated, automated structure to streamline company operations.  Smaller companies have in many cases avoided the ERP structure based on costs and need.  On the other hand, many companies small and large have embraced the ERP, realizing the potential for smoother business operations and quicker turnover.  Adopting the ERP to an existing framework has proved to be a very uncomfortable process; between costs, time and employee education the road blocks can out weigh the final result.  So back to the original question who should be adapting who...the companies adapting to the ERP structure or the ERP bending to fit the company?


For young companies the most feasible idea is to adapt to the ERP, ideally from inception.  The question for them is how much to spend?  Prices seem to vary and for a small company the price elasticity is high.  I do not know enough on the competitors and open versus closed sources to understand variations in price, this is a topic that needs exploring.  Main competitors do include SAP, Oracle,  MSFT and in the open source world Red Hat and Open Bravo.


For older, larger, more rigid companies adopting an ERP, customization may be a more practical though costly approach.  Companies with greater financial resources are in a position to pay a premium to adapt a system to match their usage needs.


In basic research of boutique, luxury, clothing brands it is unknowable as to how many companies have integrated ERP systems into their businesses, but in my fashion luxury experience, brands were missing a centralized system and it was clear they were not selling at optimal levels.  PLM (Product Lifecycle Management) is the system that one brands boasts, Elie Tahari.  Londan based label, Paul Smith, has implemented a unified communication system, Office Communication Server, but this seems like only a partial ERP system similar to that of CRM (see above).  Another downfall about getting the luxury sector to invest is probable incompatibility with third party manufacturers and stores. How do companies that have poored ample resources into an ERP structure get along with companies who are still operating in the Stone Age or using a different system altogether?

There is no question as to whether or not an ERP is needed.  It is.  To be competitive in a technological and global age, company departments must communicate and work together via a structured, tangible system to be most effective.  Little was mentioned on the process or difficulty of bringing in an ERP system on board, simply for the sake of time, but know that it is a daunting task.  With rapidly changing technology an ERP that took years to adopt and/or perfect could be outdated, requiring more resources.  As technology improves the integration, maintenance processes must improve as well as compatibility among businesses and industries.